The moderating role of ICT diffusion between financial development and economic growth: a bootstrap ARDL approach in Saudi Arabia

ABSTRACT

Several studies have proven a positive impact of information and communication technologies (ICT) on economic growth. Nevertheless, some studies have suggested a limited effect, while others have found no statistically significant effect. Faced with this problem, we conducted a study with the aim to assess the role of moderation of ICT diffusion between financial development and economic expansion in Saudi Arabia from 1990 to 2019. Using the bootstrap approach for the ARDL model, the results prove that financial development as well as ICT diffusion affect negatively (positively) economic development. The financial development interaction term with ICT diffusion has a positive and statistically significant effect on economic growth. The results suggest that ICT diffusion does not only directly impact economic growth but also increase the indirect impact of financial development on economic growth. This result indicates that ICT diffusion boosts the role of financial development in economic development. This means that financial development can only boost the Saudi economy when ICTs are well developed.

KEYWORDS:

• Bootstrap approach
• economic growth
• financial development
• ICT diffusion

Acknowledgments

The authors extend their appreciation to the Deanship of Scientific Research at Jouf University for funding this work through research grant No (DSR-2021-04-0114).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 Financial development measured by credit to private sector (% of GDP) in line with Rafindadi and Yusof (2013, 2015) and Rafindadi and Ozturk (2017) and for robustness, measured as broad money supply (Abubakar et al., 2015; Adu et al., 2013; Ono, 2017; Samargandi et al., 2015).

2 Using Monte Carlo simulations, Montalvo (1995) and Kao and Chiang (2000) demonstrate the superiority of the DOLS method in the case of small samples.

3 See: http://www.doingbusiness.org/rankings.

Additional information

Notes on contributors

Zouheyr Gheraia

Zouheyr Gheraia is assistant Professor at the Department of Business Administration, College of Business, Jouf University, Skaka, Saudi Arabia. He received a PhD in International Economics and Finance from the Faculty of Economics, Commercial and Management Sciences, Algeria University, Algeria. His research areas cover, international economics, international finance, financial markets.

Mehdi Abid

Mehdi Abid is assistant Professor at the Department of Finance and Investment, College of Business, Jouf University, Skaka, Saudi Arabia. He holds a PhD in Quantitative methods from the Faculty of Economics and Management of Sousse, University of Sousse, Sousse, Tunisia. His research areas cover, among others, natural resources management, energy and environmental economics and the economics of informality. His work has appeared in journals such as energy policy, energy reports, Resources policy, journal of Environmental Management, Sustainable Cities and Society, among others.

Habib Sekrafi

Habib Sekrafi is assistant Professor at the Department of Quantitative methods, Faculty of Economics and Management of Sousse, University of Sousse, Sousse, Tunisia. My main research interests are on applied economics and business administration related to economic development, energy economics and natural resources management.

Hanane Abdelli

Hanane Abdelli is assistant Professor at the Department of Business Administration, College of Business, Jouf University, Skaka, Saudi Arabia. She received a PhD in Economic analysis from the Faculty of Economics, Commercial and Management Sciences, Algeria University, Algeria. His research areas cover, Financial Markets, Macroeconomics, Islamic Economics.